A push for infrastructure projects, especially outside of Metro Manila, means it would be wise for developers eyeing longterm growth to “zero in on the thriving opportunities outside of the country’s capital”
Cebu’s average residential price was US$1,997 per square meter in the first half of 2017, a Colliers official says. Compare that with Hong Kong ($21,888), Singapore ($15,251), India ($11,455), Japan ($10,784), and China ($8,186).
If real estate players want to make big bucks this year, they should consider expanding to other cities to sustain their business.
“Metro Cebu is running short of land and if you want to sustain growth of your business, consider other emerging cities,” said Filipino Homes vice president Chris Malazarte during the second Cebu Property Summit held last Friday.
Davao, Iloilo, Cagayan de Oro, Bohol, Bacolod and Dumaguete are among the ripe destinations for real estate expansion in Visayas and Mindanao, according to Malazarte.
Expanding to these areas will allow local real estate players to maximize growth potential and cement their foothold in the industry, he said.
Opportunities await
Malazarte disclosed that his group has been helping listed property company Cebu Landmasters Inc. (CLI) in scouting for potential locations in the Visayas and Mindanao and in selling their projects to local and international markets.
“There are still plenty of opportunities in Cebu but eyeing for longer-term (growth), you have to expand your horizons,” said the Filipino Homes official, adding that these emerging cities already have thriving industries that would translate to an increasing demand for residential and office spaces.
“You shouldn’t limit your growth to Cebu,” he said.
Expanding outside of Cebu will likewise put real estate players in the best position to capture opportunities from government’s infrastructure program. Malazarte said robust land banking activities are ongoing in Cordova, following confirmation of the construction of the 8.25-kilometer Cebu-Cordova bridge targeted for completion by 2021.
Outside capital
Colliers International Philippines research manager Joey Roi Bondoc, in the same summit, said that President Duterte’s “golden age of infrastructure” would buoy demand for property.
A push for decentralization as seen in projects for road networks, improved airports, better transportation system and new bridges, should unlock land values in areas outside Metro Manila and stimulate business in the countryside, he said.
“We recommend that developers zero in on the thriving opportunities outside of the country’s capital,” said Bondoc, quoting the Collier Philippines’ top 10 predictions for 2018.
Colliers also expects developers to continue venturing into residential projects in second-tier and third-tier cities, where demand primarily comes from end-user buyers.
“The markets may be smaller compared to Manila but are more stable in terms of end-user housing demand,” the property research firm said.
Housing and Land Use Regulatory Board (HLURB) 7 Director Francis Ordineza, in a separate interview, said real estate projects have increased, particularly in Bohol, due to the province’s flourishing tourism sector and new infrastructure projects to be erected in the island.
“Condominium and condo-hotel applications are noted in Dauis and Panglao, as real estate developers take advantage of the island’s potential to as a retirement and tourism destination,” said Ordineza.
Still expanding in Cebu
Meanwhile, Cebu’s strategic location and profile—the comfort of an urban landscape balanced with natural attractions—continued to attract foreign retirees, end-users and investors.
Bondoc said there remains a healthy expansion of vertical and horizontal projects in Cebu, although more house and lot projects were launched during the first half of 2017.
Launches in the first half reached 1,200 units, up by 34 percent compared to the first half of 2016. Take-up of house and lots in the first six months of 2017 was at 1,400 units, down by 16 percent year on year.
“Due to continued development of projects in Mandaue, Lapu-Lapu, and Cebu City, house and lots have become more expensive, resulting in a more aggressive development of affordable units,” said the Collier.
Wider options in the province and higher levels of completion have caused launches and takeup to slow down for vertical projects, said Bondoc.
Launches of condominium units within the first half of 2017 reached approximately 1,280 units, which 57 percent lower than the same period in 2016.
Take-up of condominiums, on the other hand, totaled 2,600 units, reflecting an 18 percent decline compared to the first half of 2016.
Who’s buying?
Demand for larger condominiums in Cebu City is partly driven by foreigners living in major business hubs, while take-up for studio and one-bedroom units is fueled by the demand from local and foreign investors, BPO employees, and affluent college students from the city and neighboring towns and provinces.
An average of 3,500 units are projected to be completed annually over the next four years in Cebu.
In the medium term, Colliers sees more luxury and leisure condominium developments in Lapu-Lapu City, while affordable projects are expected in Mandaue City.
Average residential price in Cebu during the first half of 2017 stood at P96,000 per square meter in Cebu City for vertical projects and P6.4 million per unit for horizontal projects.
Prices for vertical developments in Lapu-Lapu City averaged P115,300 per square meter, while horizontal project prices averaged P2.5 million per unit. Bondoc said condominium projects were costlier in Lapu-Lapu City because of its profile as a leisure destination.